USAIG is involved in a lawsuit to reject coverage for an accident in which a Falcon business jet overran a runway, shearing off the landing gear and causing other damage. According to USAIG, the aircraft was operated by an unlicensed pilot and a second that was not authorized to control the aircraft without a fully licensed pilot, in contrast to statements made about who would fly the aircraft.
The defendant, which filed a claim on the accidents, meanwhile, has maintained that USAIG should cover the accident because the operator did not provide any misrepresentations in writing.
USAIG issued a policy covering the accident aircraft, a 2008 Dassault Falcon 900EX (now N823RC), for a period from Aug. 25, 2020, to Aug. 25, 2021. During the underwriting process, USAIG required the aircraft owner, Aerospike Iron (a limited-liability corp.), to answer a questionnaire on who would pilot the aircraft. Questionnaires were submitted for two individuals, but not the accident pilot, Scott Kitchens, who is listed as director of aviation.
The accident occurred on Feb 13, 2021, when, upon takeoff, the aircraft did not lift off the ground of Montgomery-Gibbs Executive Airport in San Diego. The pilots, Kitchens (who did not hold a valid pilot license) and Nathan Russel (whose limited license prohibited him from piloting the aircraft without another piloted license in command), aborted the takeoff. The aircraft ran off the runway into an unimproved section of the airport, incurring more than $75,000 in damage.
USAIG subsequently brought suit to rescind the policy, saying Aerospike had represented that other pilots would be operating the aircraft and that the company knew that information was used to evaluate risk, determine exclusions and terms of a policy, and set premiums. USAIG alleged that statements provided were knowingly false and that Aerospike had “expressly intended for Kitchens to fly the aircraft even though he was not a licensed pilot.” USAIG further alleged the questionnaire submitted was done so “recklessly, without consideration as to whether the statements were true or false.”
Aerospike Iron unsuccessfully sought to dismiss the lawsuit, arguing that USAIG has failed to “plead that the alleged representations regarding who would or would not fly the aircraft in the future were made in writing” and that USAIG failed to point to specific sections of the policy requiring the disclosure of “material facts.”
According to court documents, the company claims USAIG “fails to plead with particular[ity]” any provision that requires to disclose who would pilot the aircraft and contends that “any pilot approved by the policyholder is a permissible pilot under the policy.”
In permitting the USAIG case to move forward, a U.S. district court judge in December contended that issues, related to whether defendants made statements about who would and would not pilot the aircraft and the required disclosures, would be addressed through the discovery process and at later stages in the case.
“The court need not go beyond the face of plaintiff’s complaint in determining whether they have stated a plausible claim for relief,” the court documents stated.
At first look, an insurance company executive noted that cases where operators do things outside their policies are not uncommon—it’s just rare that they are uncovered and lead to accidents.
The executive questioned the defense, saying, on the surface, it appears as if either malicious intent or ignorance played a role here and neither should have a legal defense. He further suggested that a finding against USAIG could set a dangerous precedent. Neither USAIG nor representatives of Aerospike responded to requests for comment.